INDIANAPOLIS - WellPoint's fourth-quarter earnings tumbled 68 per cent, as customers of the nation's second largest health insurer raced to use their coverage last fall before it lapsed due to the health care overhaul.

The Indianapolis company said Wednesday that its medical expenses spiked 18 per cent to $14.58 billion due in part to higher use of individual policies in advance of overhaul-mandated changes that unfolded this year.

Insurers typically see a rise in use at the end of each year as patients pay up their deductibles, or the out of pocket cost before most coverage starts, and then use their coverage before that deductible renews in the new year. But WellPoint said it also saw a jump in use from patients who wanted to take advantage of their policies while they still had them.

At least 4.7 million customers nationwide received notices from their insurers last fall that their plans were being cancelled because they didn't meet coverage requirements established under the overhaul, the federal law that aims to cover millions of uninsured people. The actual number is likely much higher because officials in nearly 20 states said they were unable to provide information on cancellation notices or were not tracking it.

The overhaul also provided help to many with cancelled coverage by offering income-based tax credits that customers can use to buy a new plan on state-based insurance exchanges that started last fall.

But complaints over the cancellation notices eventually led President Obama to announce that people could keep their individual policies if state regulators approved.

WellPoint Inc. runs Blue Cross Blue Shield plans in 14 states, and its biggest market, California, did not allow these plans to be continued. The insurer did not say how many of its customers received cancellation notices. It provides individual insurance coverage for about 1.8 million people, or 5 per cent of its total medical enrolment of 35.7 million.

In its financial report for the last three months of 2013, WellPoint said it earned $148.2 million, or 49 cents per share, down from $464.2 million, or $1.51 per share, a year earlier.

WellPoint said results also were affected by a charge it booked for unloading its 1-800-Contacts business and by a higher income tax expense.

For 2014, the insurer expects earnings of more than $8 per share. Analysts expect, on average, earnings of $8.35 per share.

Investors expect 2014 to be a challenging year for insurers, as the industry adjusts to fees, taxes and funding cuts triggered by the overhaul that are expected to squeeze profitability for some coverage. But the law also will boost enrolment. WellPoint's Medicaid business will grow as some states expand eligibility for the state-and-federally funded program for the elderly and disabled people.

WellPoint also said it has received about 500,000 applications for individual coverage, mostly from the overhaul's exchanges and from people who were not WellPoint customers previously.

"We are seeing signs that our brand name and (care provider) network quality are carrying more of an advantage in the market than we expected," CEO Joseph Swedish told analysts during a Wednesday conference call.

WellPoint's stock rose almost 2 per cent, or $1.53, to $85.83 in midday trading Wednesday while broader trading indexes fell slightly. The insurer's stock price soared about 52 per cent last year and set several new, all-time high marks before closing 2013 at $92.39.